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Acc Ch 1 Book overview

by: Sidney Blaney

Acc Ch 1 Book overview ACC 2362

Marketplace > Texas State University > Accounting > ACC 2362 > Acc Ch 1 Book overview
Sidney Blaney
Texas State
Intro to Managerial Accounting

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About this Document

These are notes over Chapter 1 from the Managerial Accounting book. This consists of everything from key word definitions to important aspects that will need to be understood.
Intro to Managerial Accounting
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This 6 page Class Notes was uploaded by Sidney Blaney on Thursday September 3, 2015. The Class Notes belongs to ACC 2362 at Texas State University taught by Felan in Summer 2015. Since its upload, it has received 41 views. For similar materials see Intro to Managerial Accounting in Accounting at Texas State University.

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Date Created: 09/03/15
Acc 2362 Felan Chapter 1 Book Overview Financial Accounting focuses on providing stockholders and creditors with the information they need to make investment and lending decisions 0 Financial statements the balance sheet income statement statement of shareholders equity and statement of cash ows Managerial Accounting focuses on providing internal management with the information it needs to run the company efficiently and effectively Managers 3 Responsibilities 0 1 Planning involves setting goals and objectives for the company and determining how to achieve them Decision Making identifying alternative courses of action and choosing them Budgets the quantitative expression of a plan 0 2 Directing overseeing the company s daytoday operations Ex management uses product cost reports product sales info And other accounting reports to run daily business operations 0 3 Controlling evaluating the results of business operations against the plan and making adjustments to keep the company pressing toward its goal 0 Differences between Managerial and Financial Acct I r e um gVersus Financial Accounting What is the primary accounting product What must be included in the report and how must it be formatted What is the underlying basis of the information What business quotunitquot is the report about How often are the reports prepared 7 r Annually and quarterly l l l Independent certified public i accountants CPAsi audit the 1 Does anyone verify the annual hnancral statements of information publicly traded companies and express an opinion on the fairness of the i39inanoial l r l information they contain Yes the Securities and Exchange Commissmn lSECl renuires publicly traded companies to issue annual audited finanCial statements is the information required by an outside group government agency Is there any concern over how The concern is about adequacy the reports will affect oi disclosure behavioral employee behavior implications are secondary by r 5 4 Z 7 gtquot I Board of directors oversee the company 0 Chief Executive Of cer hired by the BOD the CEO hires other executives to run various aspects of the organization 0 Chief Operating Of cer is responsible for the company s operations such as research and developments production and distribution 0 Chief Financial Of cer is responsible for all the company s nancial concerns Treasurer is primarily responsible for raising capital through issuing stock and bonds and investing funds 0 Controller is usually responsible for general nancial accounting and managerial accounting and tax reporting 0 Internal audit function the role of the IAF is to ensure that the company s internal controls and risk management policies are functioning properly The department reports directly to a subcommittee of the BOD called the audit committee 0 Audit Committee oversees the internal audit function as well as the annual audit of the nancial statements by the independent CPA s Crossfunctional teams consist of employees representing various functions of the company such as RampD design production marketing distribution and customer service The Institute of Management Accountants IMAI is a professional association for management accountants in the US The mission of the IMA is to provide a forum for research practice development education knowledge sharing and advocacy of the highest ethical and best practices in management accounting and nance Certi ed Management Accountant CMA IMA issued the CMA In order to become a CMA you must pass a rigorous exam and maintain continuing professional education American Institute of Certi ed Public Accountants AICPA is the worlds largest association representing the accounting profession Chartered Global Management Accountant CGMAl is meant to recognize the unique business and accounting skill set possessed by those certi ed public accountants CPA s who ll or have lled accounting roles within an organization as opposed to strictly public accounting roles The IMA s Statement of Ethical Professional Practice requires management accountants to do 0 Maintain their professional competence o Preserve the con dentiality of the info They handle 0 Uphold their integrity 0 Perform their duties credibility 0 Examples of Ethical Dilemmas on pg 1214 in book SarbanesOxley Act of 2002SOX o The purpose of SOX is to restore trust in publicly trades corporations their management their nancial statements and their auditors o SOX enhances internal control and nancial reporting requirements and establishes new regulatory requirements for publicly trades companies and their independent auditors o SOX requires the company s CEO and CFO to assume responsibility for nancial statements and disclosures Exhibit 17 pg 17 o SOX also requires audit committee member to be independent meaning that they may not receive any consulting or advisory fees from the company other than for their service on the board of directors 0 SOX does not allow CPA rms to provide certain non audit services to companies during the same period of time in which they are providing audit services 0 The audit partner must rotate off the audit engagement ever FIVE years and the audit rm 0 much undergo quality reviews everyone ONE to THREE years 0 SOX increases the penalties for whitecollarjobs such as corporate fraud 0 FrankDodd Act of 2010 International Financial Reporting Standards IFRS pg 18 Extensible Business Reporting Language XBRL enables companies to release nancial and business information in a format that can be quickly efficiently and cost effectively accessed sorted and analyzed over the internet 0 XBRL has several advantages see pg 19 0 Because of the bene ts the SOX requires that all publically trades companies use XBRL to ling their nancial reports for all period afterJune 2011 Sustainability refers to the ability of a system to maintain its own viability endure without giving way or use resources so they are not depleted or permanently damaged 0 In other words it s the ability of a system to operate in such a manner that it is able to continue inde nitely o The UN de nes it as quotthe ability to meet the needs of the present without comprising the ability of the future generations to meet their own needsquot 0 Others see it as the golden rule quotdo unto others including future generations as you would have done unto youquot 0 Sustainability has three pillars environmental social and economic A company will only be viable in the long run if all three of these factors are considered when making business decisions 0 Companies are introducing quotgreen initiativesquot ways of doing business that have fewer negative consequences on the earth s resources 0 Most of the leading companies in the world are now issuing corporate social responsibility CSR reports through which they communicate their social and environmental impact Triple Bottom Line recognizes that a company s performance should be viewed not only in terms of its ability to generate economic pro ts for its owners Also by its impact on people and the planet 0 Integrated reporting symbolized as ltIRgt quotis a process that results in communication most visibly a periodic 39integrated report about value creation over time 0 An IR is a concise communication about how an organization s strategy governance performance and prospects lead to the creation of value over the short medium and long term 0 Focuses on short term nancial measures of past performance 0 An IR report essentially describes and measures all material elements of value creation not just those relating to nancial capital 0 North American economics have shifted away from manufacturing and toward SERVICES Service companies provide health care communication transportation banking and other important bene ts to society Service companies now make up the LARGEST sector if the US economy Technology and healthcare are expected to be among the fastestgrowing industries over the next decade 0 The eld of managerial accounting has expanded to meet the needs of service and merchandising rms as well as manufacturers example on pg 21 0 Globalization has several implications for managerial accoun ng o Stiffer competition means managers need more accurate and timely info To make wise business decisions 0 Companies must decide whether to expand sales andor production into foreign countries 0 Companies can learn new management techniques by observing their international competitors 0 Enterprise resource planning ERP systems that can integrate all of a company s worldwide functions departments and data 0 ERP systems such as SAP and Oracle gather company data into a centralized data warehouse o The system feeds the data into software for all of a company s business activities from budgeting and purchasing to production and customer service 0 Advantages to ERP systems on pg 22 Costbene t analysis weighs the expected costs of taking an action against the expected bene ts of the action 0 Lean thinking is a philosophy and a business strategy of operating without waste 0 One primary goal of a lean production system is to eliminate the waste of time and money that accompanies large inventories o The cost of holding inventory can add up to 25 or more of the inventory s value 0 Inventory that is held too long quickly becomes obsolete because of changing technology and consumer tastes Iustintime IIT rst pioneered by Toyota manufacturing products just in time to ll customer orders and no sooner companies are able to substantially reduce the quantity of raw material and nished products kept on hand Throughput time the time between buying raw materials and selling nished products while still maintaining high quality Total quality management TOMI is one key to succeeding in the global economy The goal of TQM is to delight customers by providing them with superior products and services International Organization for Standardization ISO is made up on 163 member countries ISO 90012008 by complying with the quality management standards set forth by the ISO and undergoing extensive audits of their quality management process The certi cation gives rms a competitive advantage in the global marketplace


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